Wall Street ended lower on Friday as investors assessed economic data and awaited a potential 50-basis point interest rate hike by the U.S. Federal Reserve at its policy meeting next week, while apparel company Lululemon slumped following a disappointing profit forecast.
U.S. producer prices rose slightly more than expected in November amid a jump in the costs of services, but the trend is moderating, with annual inflation at the factory gate posting its smallest increase in 1-1/2 years, data showed.
“Today’s data shows that inflation is coming down, but it’s lingering and is stickier than most assume,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan. However, in December, consumer sentiment improved, while inflation expectations eased to a 15-month low, a University of Michigan survey showed.
Futures trades suggest a 77% chance the Fed will raise interest rates by 50 basis points next week, with a 23% chance of a 75-basis point hike, with those odds little changed after Friday’s economic data.
Consumer prices data for November, due Tuesday, will provide fresh clues on the central bank’s monetary tightening plans.